Seems like Walmart’s acquisition of Flipkart is walking down the “high on the hog” street!
Flipkart, which owns the fashion retailers, Myntra and Jabong, is inching closer towards the lofty perch of the market leader while Amazon.com Inc. (NASDAQ:AMZN) lags behind. This hints towards the fact that Flipkart might be gaining market share, and also at a faster pace, over its main rival, Amazon India.
Flipkart Sales Growth In India
In consonance with people familiar with the matter, gross sales at Flipkart witnessed an upsurge of roughly 50% starting from this year, accountable to the end of Q2, 2018. On one hand, where Flipkart could cave-in an increase of 50%, Amazon India, on the other hand, rounded up the gross sales with an increase of 35-40%.
India’s online retail market is estimated to be worth $32.7 billion, by the end of 2018. Apparently, this indicates that the eCommerce will account for just 2.9% of India’s retail market as a whole in 2018. Now, considering the recent turn of events, with the world’s largest e-commerce acquisition being announced in India, the healthy rivalry between the eCommerce players is yet to make an about-face!
Flipkart vs Amazon: The Market Leader Seesaw!
Flipkart claims that, even on a standalone basis, it steers way ahead of Amazon. However, Amazon India Chief, Amit Agarwal piques the Indian eCommerce firm by claiming that the company stands ahead of Flipkart, in terms of Gross Merchandise Value (GMV) as well as Net Sales.
Agarwal even said that Amazon was certainly the leaders across all metrics.
There’s no denying in the fact that both Flipkart and Amazon have been jockeying up for the top honcho position. Additionally, an adage as true as possible, ‘Numbers really don’t lie.” Both the companies, irrespective of their at-odds-relationship, continue growing faster than the e-commerce market.
Flipkart sales have seen a boost, towards earlier October and can be accredited to the primary demand of smartphones increasing. However, according to numerous logistics experts, market research companies and firm analysts, Flipkart continues to finish in front of Amazon by a thin gap of margin. Flipkart has made its business go in their favour under the guidance of Chief Executive Officer (CEO) Kalyan Krishnamurthy.
With Krishnamurthy, Flipkart has been consistent in caving in smartphone deals with well known, celebrated brands like Motorola, Xiaomi and others. As a matter of fact, 60% to 65% of Flipkart’s Gross sales were driven by Smartphones.
However, taking the Jeff Bezos owned – Amazon – the company has its largest product category under smartphone, but the distribution of products is even. Unlike Flipkart which has a concentrated sales layer around smartphones, Amazon India maintains its sales significantly in smaller categories such as books, groceries and electronic accessories. Herein, there’s a clear notion of the vast difference in their strategic alignment.
Despite Competition, Indian eCommerce has Slowed Down!
Over the last couple of years, the Indian e-commerce market has seen a clear deceleration which can be accredited to many direct or indirect factors. Be it regulatory actions like revised guidelines for foreign direct investment (FDI), demonetization or the new goods and services tax regime; these factors have led to the decline in consumer spending.
India’s eCommerce market is witnessing a two-pronged fight between Jeff Bezos-led Amazon and Walmart-backed Flipkart.
For the record, Amazon had outpaced Flipkart’s growth rate in the financial year 2017. However, according to a report by Praxis Global Alliance, this home-grown, Indian online marketplace remains India’s largest.
Additionally, if sources are to be trusted, Amazon has planned to create the biggest war chest against Flipkart. Amazon is investing $27 billion in India ahead of Walmart closing the acquisition of Flipkart.
Looks like with the backing of Walmart Flipkart is on a level playing field with Amazon now. Consumers can expect raining discounts during the upcoming festival season as neither Amazon nor Flipkart seems to be in the mood to leave any stone unturned in a bid to capture the market.